Lately at Lockton we’ve been receiving questions about the HIPAA requirement that health plans obtain a health plan identifier (HPID) from the Department of Health and Human Services (HHS). Our 
advice, at least for now, is that clients should not rush out to get HPIDs for the health plans they sponsor. That’s because the HPID is tethered to a technical issue that HHS is actively analyzing, and there’s a chance HHS may excuse employers from the need to obtain HPIDs, or delay the deadline for doing so.
Even if employers remain saddled with the requirement to obtain HPIDs, the earliest deadline is Nov. 5, 2014, with small health plans having an additional year (see the discussion below about healthcare programs that qualify as “small plans”). Waiting until the deadline is closer before applying for an HPID may be to an employer’s advantage when it comes to completing HHS’ online application process. The process is cumbersome, at best, and delaying a few months may give HHS time to streamline it and work out any bugs.
HHS’ current deliberations, coupled with the relatively long lead times for application, mean that procrastination may prove to be employers’ best HPID compliance strategy for the time being.
What’s the Point of Getting an HPID?
One of HIPAA’s goals was to improve the efficiency of the health care system by encouraging electronic data interchange (EDI). To this end, HHS has issued extensive specifications regarding electronic transactions, including rules requiring medical providers to obtain unique identifiers for use when filing claims and conducting certain other electronic transactions. Now, HHS is requiring health plans to obtain unique identifiers.
Under HHS’ rules, each “controlling health plan” (CHP) is required to apply for and obtain an HPID. While the definition of a CHP is less than clear, it seems intended to include employer-sponsored health plans, whether insured or self-insured. That means the employer generally will be responsible for obtaining an HPID unless it has arranged for a third party to do so. Anecdotally, we’re hearing that some large insurers paying self-insured plans’ claims under “administrative services only” contracts do not intend to obtain HPIDs for their self-insured customers.
Given that employers usually have very little association with the claims payment process, it would make more sense to clarify or redefine CHP to include entities with claims processing responsibility (generally, insurers or TPAs), and exclude employer-sponsored health plans. We hope that something like this results from HHS’ deliberations, eliminating the need for employers to apply for HPIDs. We’ll continue to monitor the situation.
What Qualifies as a Small Health Plan?
Because “small health plans” have been given an additional year to secure a HPID, it’s important to examine exactly what constitutes “small.” HHS defines a small health plan as a health plan with annual receipts of $5 million or less. The question is, what are “receipts” in the case of an employer-sponsored health plan?
While HHS has not provided a clear answer, the most reasonable interpretation is that premiums paid for coverage (on the part of both the employer and the employee) should be considered receipts in the case of an insured plan. For a self-insured plan, the amount the employer takes out of its general assets to pay claims and expenses should be considered receipts.
Keep in mind that “small health plan” refers to the ERISA plan that includes the health benefits. If an employer has bundled life, disability or other non-health benefits into a single ERISA plan with the health benefits, available guidance does not state whether all of these benefits or just the health benefits count toward annual receipts. We are presuming that an employer in this situation may take into account only the health benefits provided under the ERISA plan but, without guidance, some uncertainty remains. The guidance also does not specify what year should be considered to determine annual receipts, but the last complete calendar year probably is not a bad choice.